Daily Market Outlook by Kate Curtis from Trader's Way

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Forex Major Currencies Outlook (Nov 08, 2017)

USD

The US dollar took some hits during the New York session when rumors swirled that Senate would impose a one-year delay before implementing tax cuts. Medium-tier reports such as consumer credit and JOLTS job openings data turned out stronger than expected. There are no major reports lined up from the US today so the focus could remain on tax reform.

EUR

The euro had a mixed run as reports also came in mixed. German industrial production sank 1.6% versus the estimated 0.7% drop while the region's retail sales report printed a stronger than expected 0.7% gain. Only the French trade balance is lined up from the euro zone today.

GBP

The pound struggled to hold on to most of its gains as medium-tier reports barely provided support. The UK BRC retail sales monitor fell by 1.0% versus the earlier 1.9% gain while the Halifax HPI posted a stronger than expected 0.3% increase. There are no major reports due from the UK today.

CHF

The franc rallied upon seeing a small gain in SNB foreign currency reserves that wasn't enough to spook intervention fears. The reading climbed from 724B CHF to 742B CHF. There are no reports due from the Swiss economy today so the franc could take its cue from market sentiment and counter currency action.

JPY

The yen was able to gain a bit of ground when the dollar weakened in the latter trading sessions. It also helped that Japan's average cash earnings figure came in stronger than expected at 0.9% versus 0.6%. Only the Japanese leading indicators is due today and a small dip is eyed.

Commodity Currencies (AUD, NZD, CAD)

The Loonie had an active trading session but was able to end positive as Poloz did not sound too dovish in his testimony. While he warned of weak wage growth due to slack in the labor market, he also expressed openness to the idea of seeing inflation overshoot their target. Meanwhile, the Kiwi dipped upon seeing another drop in dairy prices during the GDT auction. The RBNZ decision is due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 09, 2017)

USD

The US dollar rallied then reversed as traders have been paying extra close attention to tax reform updates. Senators are gearing up to unveil their version of the tax bill today while Congress will vote on theirs next week. There have also been rumors that Senate might impose a one-year delay before implementing tax cuts. Only the initial jobless claims and final wholesale inventories data are due today, so the focus could still be on tax reform.

EUR

The euro weakened to the commodity currencies but managed to regain ground against the yen and pound. Only the French trade balance was released from the region and the actual figure came in line with expectations, leaving the shared currency reactive to its counterparts instead. German trade balance and EU economic forecasts are up for release today, but these aren't highly expected to cause huge swings for the euro.

GBP

The pound was one of the weakest performers for the day as fresh Brexit jitters popped up. There has been waning support for PM May's government and it doesn't help that the EU is suggesting pushing back future negotiations until unresolved major issues regarding citizen's rights in the post-Brexit period are settled. There were no major reports out of the UK yesterday and none are due today, so the focus could remain on Brexit uncertainties.

CHF

The franc slid mostly lower against its peers as risk-taking was in play. There were no major reports out of the Swiss economy yesterday while today has a speech by SNB head Jordan. Jawboning could be part of his testimony as usual but expressing less concern about franc strength could allow the currency to rebound.

JPY

The yen had a mixed run as it mostly reacted to country-specific factors. Data turned out weaker than expected as core machinery orders sank by 8.1% instead of just by 1.8% while the current account surplus was smaller than expected at 1.84T JPY. The Economy Watchers Sentiment index is due next and a fall from 51.3 to 50.7 is eyed.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi got its wings back when the RBNZ kept rates on hold as expected while adjusting its forecast for hitting the inflation target earlier. This also meant an adjustment to their OCR interest rate forecasts. Acting Governor Spencer also assured that government changes would have little effect on economic conditions. Chinese CPI readings turned out better than expected, which is also supporting the Kiwi at the moment, while US crude oil inventories rose by 2.2 million barrels instead of falling by 2.5 million.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 10, 2017)

USD

The US dollar was mostly weaker against its peers as the Senate version of the tax plan differed with that of the House. This signals that it would take much longer than initially expected before any of these are implemented, especially since Senate is also proposing a one-year delay for the cuts. US banks are closed for the holiday today but the UoM preliminary consumer sentiment index is still up for release and analysts are expecting to see an increase from 100.7 to 100.8.

EUR

The euro got a boost from upgraded forecasts by the EU, which supported the idea of tapering next year and possibly an interest rate hike later on. ECB member Coeure also had a testimony with hawkish remarks suggesting that QE cannot go on indefinitely. Data also turned out better than expected as the German trade balance showed a surplus of 21.8 billion EUR versus the estimated 21.0 billion EUR figure. French industrial production and private payrolls are due next, along with Italian industrial production data.

GBP

The pound was dragged lower by the usual slew of Brexit concerns and the possibility of delaying the trade talks to next year. UK manufacturing production data is due today and analysts are expecting to see a 0.3% uptick while industrial production could also post a 0.3% gain. The goods trade balance and NIESR GDP estimate are also lined up.

CHF

The franc ticked higher during the London session as risk aversion was present but gave up some of its ground to the commodity currencies later on. The Swiss jobless rate came in line with expectations at 3.1%. There are no reports due from the Swiss economy today so the franc could be sensitive to market sentiment.

JPY

The yen had a mixed run as the lack of top-tier data left it vulnerable to currency-specific factors. The tertiary industry activity index is up for release next and analysts are expecting to see a 0.1% dip. Yen price action could also hinge on risk sentiment and bond yields from here.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was able to hold on to its gains, thanks to dollar weakness and the continued strength in crude oil prices. Rumors that the crown prince of Saudi Arabia will take the throne soon reinforced the anti-corruption crackdown, which has been positive for the commodity. There are no other reports due from the comdoll economies.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 13, 2017)

USD

The US dollar had a mixed run against its counterparts at the end of the previous trading week as banks were closed for Veterans Day. The preliminary UoM consumer sentiment index fell from 100.7 to 97.8 versus the estimated improvement to 100.8 to reflect weaker optimism. Only the federal budget balance is due next and the focus could remain on tax reform.

EUR

The euro managed to hold its ground by the end of the week as sellers probably booked profits from their short positions earlier on. Data from the region was weaker than expected as French preliminary private payrolls and Italian industrial production came in short of consensus. Germany is set to print its wholesale price index and might show a 0.4% increase.

GBP

The pound was off to a weak start this week even as the UK printed stronger than expected manufacturing production data on Friday. Both industrial and manufacturing production rose 0.7% while the goods trade deficit was smaller than expected. Earlier today, the Rightmove HPI showed a 0.4% fall in house prices.

CHF

The franc was able to chalk up some gains against most of its rivals even though there were no major reports out of the Swiss economy on Friday. There are still no reports due from Switzerland today so the currency could be sensitive to its counterparts' direction and overall market sentiment.

JPY

The yen was in a weak spot on Friday as risk appetite was present for the most part. Japanese tertiary industry activity fell 0.2% versus the projected 0.1% dip. Over the weekend, the PPI turned out stronger than expected with a 3.4% gain versus the projected 3.1% increase. Preliminary machine tool orders data is due next, along with a speech by BOJ Governor Kuroda.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to stay afloat against most of their peers as risk appetite was on their side. There were actually no major reports from Australia, New Zealand, and Canada then and none are due today as Canadian banks are closed for the holiday. With that, the comdolls could be off to a slow start or could stay sensitive to market sentiment.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 14, 2017)

USD

The US dollar recovered against some of its peers at the start of the week as traders renewed hopes for tax reform progress. There were no reports from the US economy yesterday while today has PPI data and a speech by Chairperson Yellen. The House is scheduled to vote on their version of the tax bill on Thursday and Trump will be giving a speech to urge GOP members to work together.

EUR

The euro advanced against most of its counterparts as it took some of the flows from the pound. Traders are also likely bracing for strong flash GDP data from Germany, Italy, and the entire region. ECB head Draghi has a testimony scheduled, ahead of the release of German ZEW economic sentiment data and euro zone industrial production.

GBP

The pound was off to a terrible start in the week on reports of troubles in UK PM May's government but traders quickly booked profits off the short positions ahead of this week's top-tier releases. For today, the CPI readings are due and the headline figure is expected to climb from 3.0% to 3.1% which might keep the BOE in hiking mode. Core CPI could also tick higher and BOE head Carney has a speech due.

CHF

The franc was able to scrape some gains on risk-off flows for the most part of the day. There were no reports out of the Swiss economy yesterday while today has PPI numbers due. Producer prices could post a 0.2% uptick, slower than the earlier 0.5% gain.

JPY

The yen also took advantage of risk aversion yesterday but traders could be a little more cautious ahead of the Japanese preliminary GDP release later on. The economy likely grew 0.4%, slower than the earlier 0.6% expansion. BOJ head Kuroda has another speech lined up and he is expected to highlight the effectiveness of the QQE program and the challenges facing inflation.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was on rocky footing ahead of Chinese data due today. Industrial production and fixed asset investment are projected to fall, which would signal weaker demand for raw materials and commodities, while retail sales could tick higher. Crude oil is having trouble sustaining its climb on rising US oil rig counts, leading many to book profits off the positively-correlated Loonie as well.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 15, 2017)

USD

The US dollar gave up ground to most of its rivals once more as fresh setbacks to tax reform loomed. Senator Paul Rand shared plans to abolish an Obamacare provision tied to tax legislation and this could mean more complications when it comes to working with the House version, which is scheduled to be voted on this week. US PPI came in stronger than expected with 0.4% gains for both headline and core figures. CPI and retail sales are due today and strong data could still be upstaged by tax reform updates.

EUR

The euro was the strongest performer as it raked in gains across the board on upbeat GDP data. The German economy grew 0.8% versus the projected 0.6% expansion while Italy's GDP came in line with estimates at 0.5%. The region's growth figure landed at 0.6% as expected. French final CPI and the region's trade balance are lined up next.

GBP

The pound dipped upon seeing weaker than expected UK inflation data. Headline CPI came in weaker than expected for October as the reading held steady at 3.0% instead of improving to the estimated 3.1% figure. Core CPI was also unchanged at 2.7% instead of rising to 2.8%. The claimant count change and the average earnings index are lined up next, with the latter expected to fall from 2.2% to 2.1%.

CHF

The franc also advanced against most of its peers as PPI beat expectations. Producer prices rose 0.5% versus the projected 0.2% uptick to signal stronger inflationary pressures down the line. There are no reports due from the Swiss economy today so market sentiment could push franc pairs around.

JPY

The Japanese yen advanced to the dollar and comdolls but was weaker against the European currencies. Japan's economy expanded by 0.3% in Q3 versus the projected 0.4% growth figure and the earlier 0.6% GDP reading. The GDP price index posted a 0.1% uptick as expected and the revised industrial production figure is due next.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was the weakest of the bunch as it got dragged lower by downbeat Chinese data and weak wage growth. Fixed asset investment, industrial production, and retail sales from China came in below consensus, signaling weaker demand for commodities. The quarterly wage price index came in at 0.5% versus 0.7%. US crude oil inventories data is due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 16, 2017)

USD

Dollar pairs are treading carefully as traders are waiting for more updates on tax reform and the House vote this week. Data came in mixed, with headline and core CPI up 0.1% and 0.2%, respectively. Headline retail sales rose 0.2% instead of printing a flat reading while the core version of the report showed a 0.1% uptick. Initial jobless claims, import prices, industrial production, and the Philly Fed index are due today.

EUR

The euro retreated from its strong climb earlier in the week despite stronger than expected data. The region's trade balance turned out stronger than expected at a surplus of 25 billion EUR versus the estimated 21.2 billion EUR reading. Final CPI readings are due today and no revisions to the 1.4% and 0.9% estimates for the headline and core figures are expected.

GBP

The pound regained some ground upon seeing mostly stronger than expected jobs data. Claimant count rose by 1.1K versus the projected 2K increase in joblessness while the average earnings index came in at 2.2% versus the estimated 2.1% increase. The previous reading also enjoyed an upgrade to 2.3% to reflect stronger wage growth than initially reported. UK retail sales data is due today and a 0.1% uptick is eyed.

CHF

The franc continued to advance against most of its peers as it raked in safe-haven gains away from the dollar. There were no reports out of the Swiss economy yesterday but the previous ones have been mostly stronger than expected, easing fears of SNB intervention. There are still no reports due from Switzerland today so franc pairs could take their cues from market sentiment.

JPY

The yen also took advantage of dollar weakness and was able to get a boost from the upgraded industrial production figure. The reading was revised from a 1.1% decline to just 1.0% for September. There are no major reports due from Japan today so the yen could continue to wait for clues from the dollar or overall sentiment.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was one of the weakest performers for the day as it was bogged down by weak wage growth. Earlier today, Australia's jobs figures turned out weaker than expected as the economy added only 3.7K jobs in October versus the projected 17.8K gain. However, the previous reading was upgraded while the unemployment rate ticked lower. Falling oil prices on rising inventories weighed on the Loonie. New Zealand will release its quarterly PPI next and slower quarterly gains are eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 17, 2017)

USD

The US dollar drew some support from news that Congress has been able to pass the tax bill in their vote this week. However, the currency quickly returned its wins as traders turned their attention to the challenges that lie ahead. For one, Senate has a very different version and it would take a while before both chambers come up with a unified one. Data turned out mixed, with industrial production and capacity utilization coming in better than expected. Import prices and the Philly Fed index, on the other hand, disappointed. Only building permits and housing starts are due today.

EUR

The euro retreated slightly against its peers as there were no major reports out and traders focused on the political uncertainty in Germany. Final CPI readings were unchanged at 1.4% for the headline figure and 0.9% for the core reading. ECB head Draghi has a speech today and Italy will release its trade balance, just after the release of the region's current account balance.

GBP

The pound got some support from stronger than expected UK retail sales. The report showed a 0.3% uptick versus the projected 0.1% gain. There are no reports due from the UK economy today so traders might be extra sensitive to Brexit updates.

CHF

The franc gave up some of its previous wins as risk-taking returned. There were no reports out of the Swiss economy then and the currency didn't draw any support from SNB member Maechler's speech. There are no reports due from the Swiss economy today so market sentiment is likely to stay in play.

JPY

The yen was also in a weak spot as risk appetite was present in the financial markets. There were also no reports out of Japan then and none are due today so risk sentiment could continue to push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar drew support from stronger than expected jobs data as the economy added only 3.7K jobs in October but saw a large upgrade in the earlier figure to 26.6K. Underlying data also showed that full-time hiring was actually strong but the gains were nearly wiped out by falling part-time hiring. Canadian CPI figures are due next and downbeat data could weigh on the Loonie. New Zealand's quarterly PPI readings came in below expectations at 0.1% gains for input and output prices.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 20,2017)

USD

The US dollar had a mixed run despite stronger than expected building permits and housing starts data released on Friday. Building starts jumped from 1.23M to 1.30M versus the consensus at 1.25M while housing starts rose from 1.14M to 1.29M. Only the CB leading index is due today and analysts are expecting to see a 0.6% rebound after the earlier 0.2% dip.

EUR

The euro was off to a weak start on reports that German talks for a three-way coalition broke down. Angela Merkel is scheduled to meet with the German President to inform him that she failed to form a coalition with the Greens and FDP, which could lead to a call for elections again and more political uncertainty. Euro zone current account balance turned out stronger than expected on Friday and Draghi has a speech today.

GBP

The pound was also one of the weaker performers even though there were no major reports out of the UK. Political uncertainty is also in play, along with Brexit risks on businesses. BOE MPC member Ramsden has a testimony lined up today but traders could hold out for the Inflation Report hearings and Autumn Forecast Statement lined up later in the week.

CHF

The franc regained ground to most of its counterparts as it enjoyed most of the safe-haven gains. There were no reports out of the Swiss economy on Friday and none are due today so market sentiment could stay in play.

JPY

The yen also raked in plenty of gains at the end of the week as risk appetite was feeble. Over the weekend, Japan printed a stronger than expected trade surplus of 0.32 trillion JPY versus the projected 0.21 trillion JPY figure and the earlier 0.27 trillion JPY reading. There are no reports due from Japan today so the yen could take its cue from market sentiment or bond yields.

Commodity Currencies (AUD, NZD, CAD)

The Aussie chalked up losses across the board but recovered some against the euro. The Loonie also weakened even though inflation readings were actually slightly better than expected. In New Zealand, the food price index posted a sharper 1.1% drop versus the earlier 0.2% dip. There are no reports due from the comdoll economies today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 21, 2017)

USD

The US dollar was able to chalk up some gains to its counterparts despite lower liquidity during the shortened work week. The CB leading index came in stronger than expected with a 1.2% gain versus the projected 0.6% uptick. Existing home sales data and a speech by Fed Chair Yellen are lined up today, but updates on tax reform and North Korean tensions could also push the dollar around.

EUR

The euro was able to recover some of its losses from the start of the week as jitters over Germany's political troubles faded. German PPI turned out stronger than expected with a 0.3% uptick versus the estimated 0.2% gain. There are no major reports due from the region today, so political updates could push the shared currency around.

GBP

The pound made quite a recovery on renewed optimism for Brexit negotiations only to retreat when EU's Barnier talked about potentially blocking a trade deal with the UK. BOE Inflation Report hearings are scheduled today and traders are likely to take cues from policymakers' inflation outlook and rate hike biases for next year.

CHF

The franc gave up some ground as risk appetite returned to the markets during the European session. There were no reports out of the Swiss economy then while today has the trade balance on tap. Analysts expect the surplus to widen from 2.92 billion CHF to 3.21 billion CHF, which might be bullish for the franc unless risk-taking surges once more.

JPY

The yen also lost ground to risk-taking despite stronger than expected Japanese trade balance released over the weekend. The all industries activity index is up for release today and a 0.4% dip is eyed, following the earlier 0.1% uptick. Apart from that, market sentiment and bond yields could also push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The higher-yielding comdolls made a bit of a recovery during the day but the Loonie lagged behind on the lack of progress in NAFTA negotiations. The fifth round of talks is set to conclude with arguments over US auto parts demands, and there's also the chance of Trump walking out of the talks altogether. The RBA minutes highlighted the central bank's cautious stance, highlighting the weakness in wage growth and spending. Canadian wholesale sales data and New Zealand's global dairy trade auction are lined up next.

By Kate Curtis from Trader's Way